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Showing content with the highest reputation on 02/12/2016 in Blog Articles
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There have been many recent articles, all over the web, in local papers and on the radio. They're saying that LEGO investing is better than gold. It's sensationalist. It excites the imagination. It sounds easy. These articles point up the sets that have increased in value many times above their initial costs. Dreamers sweep store shelves expecting instant returns and easy money. Conventional wisdom says that you'll never lose money on LEGO, it will always be worth at least what you bought it for. What if it's not? I'd like to take a journey through the dusty backrooms of stores and the dark corners of investor's storage areas to look at some themes that proved to be so unpopular that if their demand and value hasn't remained flat, it actually got worse. These are themes that got the same market push as every other theme, but failed to capture the target audience. Let's take a look at some licensed themes from recent history: The first theme that we'll take a look at is Prince of Persia. Disney's attempt to turn a video game franchise into a profitable film franchise. LEGO released 6 Sets consisting of 7569 Desert Attack, 7570 The Ostrich Race, 7571 The Fight for the Dagger, 7572 Quest Against Time, 7573 Battle of Alamut, and 20017 Dagger Trap Polybag. All combined, this theme sold at retail for a total of $190.95 (Pre Tax of course,) the current value of these sets averages to $178.75. That's a return of 94% of the initial investment. It would be worse if not for the Polybag, which I calculated at retail of free because I couldn't find any data about cost. (So, I assumed it was free.) The second licensed theme that we'll discuss is The Lone Ranger. (Personally, I loved these sets and wanted more. {if I could get them on steep discount.}) Disney released the Lone Ranger to poor reception and poor reviews. The days of the Western might be dead, and this theme sure did seem like a nail in the coffin. This theme consisted of 6 sets and 2 Polybags. They are 79106 Cavalry Builder set (How they can be cavalry without horses I don't know. I guess Artillery is confusing,) 79107 Comanche Camp, 79108 Stagecoach Escape, 79109 Colby City Showdown, 79110 Silver Mine Shootout, 79111 Constitution Train Chase, 30260 Lone Ranger's Pump Car, and 30261 Tonto's Campfire. The combined retail total before tax is $291.92 but when I get the average sold price for the last 6 months on Bricklink they sold for a grand total of $283. Slightly better than Prince of Persia with 97% remaining value. It's probably not LEGO's fault that these themes died on the vine. Some might argue that if the source material had been better received, there would be greater demand on the aftermarket. It's a fair argument, but you could also point out that if LEGO had done a better job on the sets, they might have succeeded despite the failures of the original properties. If you think it's the fault of the source material, let's take a look at a LEGO owned theme that they got very wrong. For our non licensed theme we'll look at the horror of Galaxy Squad. It is a continuation/expansion of the classic Space theme. Science Fiction has been popular for a long time, and little boys have always wanted to be an astronaut and kill space bugs. This theme had a whopping 10 sets and 2 polybags. The sets are 70700 Space Swarmer, 70701 Swarm Interceptor, 70702 Warp Stinger, 70703 Star Slicer, 70704 Vermin Vaporizer, 70705 Bug Obliterator, 70706 Crater Creeper, 70707 CLS-89 Eradicator Mech, 70708 Hive Crawler, 70709 Galactic Titan, with polybags 30230 Mini Mech, and 30231 Space Insectoid. That's about 4000 pieces of fun right there. All of those sets together would cost $479.38 at retail before tax. How much is Bricklink's average sold price for the entire series? $320. You're losing a full third of your initial investment if you bought these at retail and sold them for the average price. Are these the only themes that have lost money? By no means. Early predictions are putting the future of Chima in the toilet. I'll let those of you inclined to do so research other past themes to see which ones should cause speculators to run for the hills. For those people who jumped in head first, thinking that investing in LEGO would be like printing money, this should serve as a sobering wake-up call. If you had bought any of these themes at retail, you'd have saved yourself time by handing $5 bills to random people on the street, or better yet, save the money by burying it in a coffee can in your backyard. With every success story and humble brag about the times when someone guessed right, there's someone cursing the hundreds or thousands of dollars tied up in inventory, eating storage space. What can you do with all those Ostrich Races or Crater Creepers? I hear Toys for Tots accepts any toy that is unopened and unwrapped. You could break them down for parts, but that's a whole different headache. The average values that I list are not a complete indication of the value of these sets. Looking at Bricklink, many have sold or are currently available for notably less than the average. On the other hand, some bought these sets at significantly below average pricing. Prince of Persia has 2 unique animals (ostrich and camel) that have some demand on the parts market. Some people are making money on these sets. Smart money avoided these themes from the beginning, most even avoided them on clearance. Some, however, are wondering if it's possible to use these sets to make storage for their moneymaking investment. If you haven't thought about it, even if you sold at the listed average price, the amount of your return is at least 7% lower due to fees. If you're buying LEGO for investment and you don't know or don't care about the themes that you are buying, chances are that you're throwing money away.2 points
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With so many total sets available and #chaos in full effect as predicted by J-Mack, I thought it would be useful for new(er) members to the site and to Lego investing on the whole to take a look at how a short or shorter than expected run can greatly impact the value of a set. Without further adieu... The Mine 4204 June 1st, 2012 – Nov. 29th 2014 CAGR: 0.05% I loved 4204 The Mine. It had a lot going for it (at least in my eyes) – cool subtheme, unlikely to be remade, and lots of potential buyers seem to like construction vehicles and sets in non-technic sets. I'm sure they like them in Technic, too, but based on sets released, traditional sets seem more popular and sell more. I got a great deal on a whole bunch of them about one and a half years in, and hoped to see it retire around the two year mark. Sadly, either more sets were produced or not enough folks were buying at MSRP because it lingered for about two and a half years. Unfortunately, the brickset.com dates also only indicate the date at which it became unavailable from Shop at Home, but I can assure you that Toys R Us in Canada still had stock into early 2015. I like a varied portfolio, I'm a big believer in the right CITY sets, but the shelf life hurt 4204 in my opinion. Currently Brickpicker lists its US value at essentially MSRP. Granted, it was a CITY set, so if you didn't get it at a good discount you can only blame yourself, but profit potential seems to have been crimped by availability from 2012 into 2015. City Cargo Terminal 60022 Aug. 1st, 2013 – Dec. 12th, 2014 CAGR: 15.97% In comparison, another large CITY set, 60022 Cargo Terminal, was available from Shop at Home for under eighteen months, total. Massive difference for another subtheme I liked and thought was cool. With a current BP value of around $155 USD, plenty of extra room to visit profit land and frolic in piles of solid returns. With CITY sets, I'm not really looking for a set to hit the stratosphere, but I find they can be steady workhorses that reliably net returns – great for mixing it up. That being said, a couple of other sets I want to focus on had even shorter runs than 60022 and have exceeded likely every investors' expectations. (I call BS if investors claim they knew The Zombies was going to break through $200 USD on launch day or even as it started to become a little hard to find) Logging Truck 60059 Dec 2013 (Jan 1st 2014 wide release) to Dec 15th 2014 CAGR: 67.27% Cool vehicle from a sometimes overlooked theme. Add approximately one year of availability, stir, and watch the money come in. Enormous ROI%, even at MSRP, but pure gravy for those with the foresight to get some of these at 20% off or more. The size of the set really helps the CAGR percentage, which is great for new investors who are looking for solid short to medium term sets that can really help a small time investor scale up. Arctic Supply Plane 60064 Aug. 1st, 2014 to Dec 28th 2014 CAGR: 43.63% Crazy short run from a theme most probably though had at least another twelve if not eighteen months. Just now the last Arctic sets have moved to Sold Out at Shop at Home, so quite a big difference. Even though the plane looks a lot like other planes (at least to me) in other City subthemes – like the plane in the Deep Sea subtheme (another Toys R Us exclusive, at least in Canada), it certainly hasn't caused collectors to NOT want to buy this set, even while its brothers and sisters were widely available. With great scarcity seems to come nice gains, even if the set doesn't seem all that amazing. Ant-Man Final Battle Jun 1st, 2015 – Oct 15th, 2015 CAGR: 25.66% Seems to be in a nice initial growth phase. Even with some chatter about this set and investors jumping on the bandwagon, the lack of new supply will likely only keep prices in relative check for a short time. Great minifigs and a very short run, plus upcoming screen time in new movies means a lot of potential. Despite knock off Superhero minifigs being an issue – and many superhero set builds being underwhelming – there is still money to be made on the right sets. Also spoiler alert the 2016 summer Superhero sets look a lot more desirable overall, so perhaps this is a good time to try out this theme (or revisit it, if you've been avoiding it in the post 6866 world). Plus, this is a crazy short shelf life for a set, even if it had issues at launch. Snowplough & Excavator and Others... The whole Demolition line seemed available on sale over the holidays, at least around me, but the Excavator seems to be the exception. Brickset lists it being available from Dec. 2nd, 2014, but general release (I believe) was Jan. 1st, 2015. A retail life under a year and from a cool subtheme, I think this might surprise in the next six to twelve months. Toys R Us Canada has them on sale right now, 33% off (Jan 29, 2016) and I tend to think this could be an easy double at this reduction with pending official retirement. The Snowplough is even cooler (at least in my opinion) and I think will be a huge draw next winter in places that get snow. Just around a year of availability and well-reviewed on other Lego sites all point to a nice potential profit in the next twelve months and beyond until it hits a plateau There are plenty of other sets from other lines, but I have to leave some work for readers to do themselves. I tried to highlight a few I find interesting, but rest assured this isn't a complete list and there are other short-run gems out there to be found. Right now, Hydra Fortresses, Pirates sets and Raptor Escapes are being sought out at retailers. The beauty of the short run sets (or themes...think Castle before and Pirates now...Scooby Doo is my prediction for 2016) is that often online stock dries up quickly and getting more than one or two requires some leg work, stock checking and dragging the kids (or self) to physical stores to mop up the remnants. For me, it is one of the most enjoyable parts of this hobby/business, although I am a self diagnosed masochist who likes the awfulness that retail environments sometimes foster. Final Thoughts Older investors are probably familiar with a lot of these sets, and earlier ones; the lore of the Zombies and Wolverine's Chopper Showdown are the stuff of investing legend, whispered about whenever two or more investors gather. Keeping a watchful eye on the forums here on Brickpicker as well as Shop at Home should give you enough lead time to go on a buying spree when you see a short run hit sold out. Currently, there are so many lines/themes and waves out there that short run sets seem to be happening with more regularity – or I'm just noticing it more – but they present opportunities that a savvy investor can jump on. If you live in a regional area with a lot of competition (from “normals” buying sets from their kids or, worse, rival Pickers) the chances of short run sets surviving long after moving to 'sold out' are slim, so stay sharp out there! Veegs1 point